A peculiar theme kept popping up during a recent trip around the mountain resorts of New England: pillows. During the day, I worked with a group of resort destinations in the area testing how they might work together to better track and understand their destination traffic. In industry-speak, this means discussing the “pillows” available and occupied each night, and the resulting revenue produced for the resort community. As a guest myself, I experienced the fierce competition among lodging properties to provide the perfect pillow, a contest that has since extended to sheet thread count, comforters and even towels.

So what's the importance of all this pillow talk? Well, each kind of pillow has a special significance for this new reality in which we live and do business.

Perfect pillows for sleeping

As lodging properties become more sophisticated, their research allows them to better understand what consumers will pay more for. As it turns out, the right pillow is near the top of the list. Along with a nice mattress, high thread count sheets and a fluffy comforter, these creature comforts go a long way toward creating value in the minds of today's consumers.

Fast forward a few years and these amenities have become the standard of a high-end property. For instance, I stayed the first night in a room with three pillows of varying firmness and texture. The second property I visited included a bedside note, offering to provide alternatives to match my whim. The third location had two matching (block foam) pillows, appearing clueless about the stiff pillow competition going on around them. I both noticed and, just like many baby boomers, will remember this the next time I have a choice.

Perfect pillows for commerce

The second kind of pillow is economic, the stuff of daytime discussions rather than nighttime dreams. Governed by the laws of supply and demand, an entire lexicon has been developed to describe the economic components of a destination resort's bed base. Some measure units while others count bedrooms or beds. We'll use pillows in our discussion since, (assuming one potential guest for each pillow) we can peg the potential economic contribution for the lodging properties, activities, restaurants and retail businesses comprising an area's tourism-dependent businesses.

In the destination travel industry, supply is measured by the total sleeping capacity of short-term guests, or available inventory. The more pillows and the more heads occupying them means the more guests staying in town, hopefully spending money to have a good time. In recent years, booming real estate contributed to the construction of more resort area pillows, increasing supply. But not all of these became part of the available inventory, so we classify them based on their potential economic contribution. Pillows available for short-term rentals are sometimes called hot pillows, while those used by second home- owners for themselves and the occasional rental are known as warm. The lonely pillows that never find their way into available inventory are considered cold.

Economic factors also influence supply. As budgets tighten, more vacation rental owners are putting their places up for others to rent, increasing the supply of warm or hot pillows. While good news for the overall inventory and related economic potential, a supply increase in a market with little demand intensifies competition within the lodging community.

The other side of the coin is demand, measured in both quantity (known as occupancy) and quality (price or rate). The total lodging revenue is the combination of occupancy and rate, representing the benchmark against which activities, restaurants and retail can merchandise their services and calculate their market share. Total lodging revenue divided by the cumulative number of pillows yields revenue per available room, known in the industry as “RevPAR.” RevPAR shows lodging operators and those in the real estate and financial markets the economic value of a pillow, unit or complex.

MTRiP utilizes both these metrics and advanced reservations already made by guests (the most reliable crystal ball these days) to help both individual lodging properties and overall destinations measure how their pillows are performing.

This tale of two pillows, one being the consumer's perception of what's perfect and the other the economics of a pillow's “highest and best use” provides a glimpse into the underlying engine fueling most of our resort communities. Resort operators and their public sector representatives are hard-pressed to be effective until they both understand and quantify the economics of an occupied pillow and the opportunity cost of one that goes underutilized.

Ralf Garrison is the founder and director of the Advisory Group, which provides marketing services to destination resorts around the country, owning and operating the Mountain Travel Research Program (MTRiP) and the Mountain Travel Symposium. You can contact Ralf at rgarrison@adv-grp.com.